FTC investigating Smurfberries, other in-app purchases

The Federal Trade Commission (FTC) has said they will be investigating in-app purchases for applications marketed to children, such as Smurfs' Village. The argument is that some children do not understand the difference between real and virtual purchases.

We fully share your concern that consumers, particularly children, are unlikely to understand the ramifications of these types of purchases. Let me assure you we will look closely at the current industry practice with respect to the marketing and delivery of these types of applications.

In order to make an in-app purchase, the user must enter their Apple ID and password to complete the transaction. If you are a parent who shares this password with your child and is concerned about whether your child fully understands the consequences of buying a $99 wagon of Smurfberries, you can edit the parental controls to restrict the ability to make in-app purchases.

Former app and photography editor at iMore, Leanna has since moved on to other endeavors. Mother, wife, mathamagician, even though she no longer writes for iMore you can still follow her on Twitter @llofte.

This doesn't seem like a FTC issue...seems more like a parenting issue. No one wants to take responsibility for anything it's always someone else fault. Password protect your device or monitorj your child while playing with his or her "toy".

Normally I'd agree with the "this is a parenting issue" statement, in general. However, my daughter and I just got dupped by a similar game, Touch Pets. She unknowingly wracked up over $300 in in-app purchases because I stupidly didn't disable that feature in Settings, thinking that the Apple authorization would be required for any purchase. Not true. This free app allowed for as many "coin" and "bone" purchases as desired, giving only a quick warning "this is real money" in small print, which my daughter clicked past.
Parents: beware. At the very least, the iPod should have In App purchases disabled by default, considering the target demographic for the iPod is underage.

This is a good thing, not because we need to crack down on companies that do this, or that we need to slap parents for allowing it to happen, but because it's being talked about and discussed. I doubt the FTC will do anything about it, because what can they do? The purpose of an investigation, however is to actually spend the time figuring out if something should be done, talking about it, and looking for solutions, simple or creative ones. And getting more of this out in the public hopefully will get people talking and discussing this.
Parents obviously need to grow up and be parents. Idiots who have money to throw away need to learn how to be frugal, or we must accept that if they have millions to throw away on something stupid, then so be it.
Companies need to stop using dirty tricks to get money from Freemium games, from both kids and adults. It may not be something that should be illegal but it's definitely immoral. Winning a game by throwing money is just not right and detracts from the game as entertaining.

The problem it that you have adults who barely understand their phones themselves sharing them with their kids. The $100 of Smurfberries is ridiculous and a poor decision on Capcom's part, but if parents are goign to share their phone with their children they should set up parent controls and only use App Store gift cards with their account.

I think it's worth a look. I haven't personally used that app but I doubt it goes out of its way to educate the parents on the in-app purchases. Let alone the kids that age that don't know or understand.

My son did this and I was billed 126.00, when I contacted applecare to see what this was they told me he had bought the smurfberries for 100 bucks, after I explained the situation to them, Apple refunded me the 126 bucks. I couldnt believe this had happened. Now in app purchases are turned off.

I tend to disagree, there are all kinds of dirty little greedy bsa*ds out there that are looking at ways to trick and deceive adults let alone children. Why choose $99 it's becuase it looks like the normal $.99 that most purchases cost. I don't know whether the FTC needs to get involved but this is a dirty little game the developer is playing.

I'm all over Apple for the subscription cash grab, but on this issue...not so much.
My older kid knows the purchase rules regarding i***** device purchases, and my younger kid simply will not get the device in a state where she can make purchases, at least until I am confident she will understand the rules as I teach them. Yes, it means I have to pay more attention, and sometimes hold the device an extra 30 seconds before handing it to her, but that is part of the job description. I understand mistakes can happen, but it sounds like from Zach's post above there is a refund process in place for the occasional accident. (Leaving aside, for the moment, the fact Apple keeps their 30% cut even though they take all the money back from the developer -- something the FTC should look into :) ).
Now, do I think a $99 in-app purchase is absurd for a game targeted at toddlers? Of course. As a parent, I also think Apple should provide more granularity for parental controls -- e.g., a switch that required the password on every atomic purchase operation, rather than allow 15 seconds of free-for-all time, would solve the specific issue here. However, unless this is something that impacts the overall public interest, these are things we as customers should demand, not things the government should wade in and require.
More to the point, this would be a rule designed to protect parents from themselves, and those sorts of rules rarely, if ever, work, because even well-meaning people stumble around them. Were the FTC to force Apple to implement my "atomic purchase" switch, for example, there would still be parents whose kids bought a truckload of smurfberries because the switch was not on by default, and the parents did not know how to change it. Should the FTC then demand these restrictions be on by default? It is a slippery slope, so the FTC needs to have a very, very compelling public interest reason to jump in wielding the heavy bat of regulation. Here, I just don't see it.

I think this is a good move on the FTC part. I'm surprised that Apple allowed this to go on in their app store. Personally I don't care for the new trend of games being 'free' then having all these in app purchases, specially when they target children. Also note that if you enter your password into iTunes to buy something, you are able to purchase things without re-entering your password for up to 15 minutes. So you can easily put your password in, download a 'game' and give it to your child and they could make purchases without entering a password.
Would be nice if you could create 'profiles' for your iPhone, iPad, iPod so that you could have one for yourself and one of your kids, so that it'll enable certain settings without having to go into parental controls all the time to configure settings.

The problem with any "rules" that the FTC might pass down is that they all depend on the parent either taking control, the kid being educated, and the kid actually following the rules, which is why it won't work.
Doesn't iTunes already allow a "spending limit" to be placed on a given itunes account? Beyond the normal parental controls, this would go a long way in stopping people from biting off more than they could chew.
The only "problem" there is right now is that in app purchases are still something that's pretty new, so maybe some education there could be helpful (some pamphlet you get when you buy an iDevice perhaps). But short of informing the customer, there's little a company can do with this kind of stuff unless they block it entirely for everyone, which I'm sure most people wouldn't want.

This is ridiculous to me, Parent's should be monitoring what is happening with their children, they need to know what is going on. For the FTC to be involved is the most idiotic thing on the planet. For the love of God parents learn to monitor your children.

In Capcom's defense, Smurfs' village is not only played by kids, the Smurfberry store is separate from the game currency store, there is one box that says "buying Smurfberries will charge your iTunes account", and another box says "costs real money". I don't think Capcom is trying to trick anyone.

Barton, call us back when you have kids. Even parents need to go to the bathroom. That's long enough for a 4 year old to buy $300 dollars in smurfberries. I understand your point about disabling the in app purchases, but low and behold there are instances where I as an adult would like to make in app purchases. The FTC was specifically created to protect consumers from unsavory business practices. This new trend is certainly that. It would be similar to Ford advertising new trucks for free. All you have to do is come down and pick one up. You go, get your keys and drive off. While doing 70 down the expressway you realize you have no brakes and call the dealership back only to be told? "Oh, brakes? Well, yea, we didn't know you wanted brakes. You will have to come back and buy those for $30,000." Well you are SOL at that point aren't you? All I'm saying is charge a fair price for your product and don't try to hide your real intentions. Treyarch sells me a really nice Call of Duty game to play. When I log on, I'm not told each map will cost me $20. Instead, they ask me for $59.99 upfront and give me something of value for my money. Just be honest with us.

C'mon, at some point you have to admit this company clearly crossed a line.
An app marketed to children "4+" (4 years and older) that contains $99 purcahses is a scam.
In this opt-out society where companies retain the right to screw you until you tell them to stop, it's just one more annoying thing to have to worry about.
We have apple items in our home (touches, pads, phones, etc.) and we don't play games on them. However, I certainly hope that when my son gets older, and we look at getting some games, that they are CLEARLY marked before downloading as a game that requires in-app purchases. We will not download any of those games ever.

I'm surprised at the criticism about this. What no one seems to really be commenting too much on is what legitimate reason would there EVER be for a $99 in-app purchase. There is NONE. Why not a buck for a few berries? It is solely deceptive. Worse yet is that it is a game targeted at kids. This is INTENTIONAL and aimed at duping kids into making the purchase.
Personally I use my password on all of my kids' iPods so they have to bring it to me to make a purchase. But what some here seem to solely blame on "bad parenting" fail to acknowledge that this was a willful deceptive tactic on the part of the game developer.

Here, here. I like to think myself a good parent and technically proficient but that didn't stop my 6 year old purchasing £120 worth of Smurfberries yesterday......it's a con, pure and simple and does nothing for Apple's reputation.

A five year old in Maine spent about $1,000 on smurfberries using her mothers account and iphone. Beeline wouldn't allow her to return the berries and make a refund.
Exploitation through children or just clever marketing?
Was she careless and stupid to have allowed her five year old access to her account or should software aimed at children have a default setting that does not allow purchases without an adult verification?
What would happen in the real world if a child presented her parents credit card at the candy store?
Yes the FTC and the European Trade Commission should look at this closely, consult with public and software companies, and issue strict guidelines covering how in app software products are marketed to children, refund policies and fair purchase measures.
Beeline may well be a reputable firm, but others will follow and many will be less scrupulous.

I think there should be checks and balances on in app purchases like this. To quote another users analogy, if a kid presented their parents credit card at a candy store, the odds are if the parent werent in attendance it would be flat out rejected.. (no sale) Theres a thin line in purchasing bonus in app content, but this recent rash of "consumable/metered" apps.. Is just a bad precident for games aimed squarely at younger people. Its important to teach them responsability, but not extort and tempt them like a common drug dealer

I agree there should be a default disabling of this option because it is irresponsible of the organisation to charge this kind of money for children's games. I am a very angry parent because I only just noticed £69.99 has been charged to my account for a silly wheelburrow!! They can not assume a parent will look at every detail of the games, especially considering ther are soo many games that sell stuff and alot of them are free allowing children to make points or tokens to purchase things. This is just robbery as far as I am concerened and no one who is not a parent has any right to to judge because you have no idea until you have children how easy it is for something that looks so simple like this to happen.

It is appalling how these companies release apps aimed at young children and put all these in-app purchases in them. I am 14 and know in-app purchases are just a sneaky way of making money, but last Autumn my brother spent £5 on 'gems' on a horse app, 69p on yet more gems in the same app and £3 for 'sheriff stars' on this cowboy app.
I am shocked that these apps are still available on the App Store.

I don't want anything that prevents me from buying something by default because I'm smart enough to not give my toddler an iPod/phone/pad. There are appropriate toys for children and apple doesn't make a single one of them. If you're willing to give your child one of these devices, then you reap the benefits.